Tuesday, February 24, 2009

Tough Times For Ireland

(From Bloomberg News)

Ireland’s Children Flee Again as ‘Dark Days’ Return

By Fergal O’Brien and Louisa Nesbitt

Feb. 24 (Bloomberg) -- Irish engineer David Kavanagh thought he’d have his pick of jobs when he graduated from college last year. Instead he’s picking countries. “There’s no jobs here; that’s why I’m considering getting out,” said the 23-year-old, who has yet to find work since he got his degree. “I would go anywhere. Australia has gone down, I hear. Canada’s the new holy grail.” As Ireland slides deeper into a recession, its workers are returning to the emigration trail that blighted the nation for 150 years until the Celtic Tiger economic boom of the 1990s. With the Dublin-based Economic and Social Research Institute forecasting that 50,000 people will leave in search of work, the country is facing what former Prime Minister Bertie Ahern calls the “dark days” of mass exodus again. “The 1980s are on people’s minds, and they don’t want to go back there,” said Dermot O’Leary, chief economist at Dublin- based Goodbody Stockbrokers. “Population growth helped drive Ireland’s economy, so a reversal is going to hurt by reducing the economy’s productive capacity.” The flight -- the biggest in two decades -- comes as Ireland’s economy shrinks the most of any euro-area nation. Gross domestic product may contract by about 10 percent between 2008 and 2010, and the jobless rate may reach 15 percent by the end of next year, a 15-year high, according to Goodbody. Unemployment averaged 4.6 percent in 2007.

Unemployment Lines

Many of those joining unemployment lines and considering emigrating worked in construction, which is shrinking at a record pace after a decade-long boom. Elaine McNamara, who came home from Australia in 2006, plans to return in June with her partner, a carpenter. “My boyfriend could be laid off at any time,” the 28-year- old said. “The building industry is very bad.” Renewed emigration marks a sharp change of fortune for the island nation, which has a population of 4.4 million. Between 2000 and 2008, a net 400,000 people arrived, drawn by work at building sites, factories and hotels. That’s all changed as Dell Inc., Intel Corp. and Waterford Wedgwood Plc, the Kilbarry, Waterford-based maker of crystal and tableware, cut jobs. Biggest Exporter Once Ireland’s biggest exporter, Dell -- based in Round Rock, Texas, and the world’s second-largest personal-computer maker -- said last month it will eliminate 1,900 jobs at its factory near Limerick. Santa Clara, California-based Intel, the world’s biggest maker of computer chips, said on Feb. 17 that it is seeking 200 to 300 voluntary job cuts at its plant in Leixlip, west of Dublin, where about 5,000 people work. Davy, Ireland’s largest securities firm, this week said it will cut 12 jobs, adding to the 70 it shed last year. Unemployment-benefit claims rose 11 percent to 326,100 in January, the highest since records began in 1967. The biggest exodus this year will be among the 170,000 workers who arrived during the past four years from Poland and other central and eastern European countries. Locals are starting to join the retreat, threatening smaller communities that often rely on a single industry. “The mood is bad; lads just don’t know where they stand right now,” said Padraic O’Flaherty, chairman of the Micheal Breathnach Gaelic football club in western Ireland. He said 11 of the 15-member senior team have recently lost their jobs, most from construction sites. “It looks like, at the moment, that some of them will have to head abroad.”

GDP Growth

Even so, there’s little likelihood of the wholesale exodus that marred earlier decades. Between 1871 and 1961, Ireland’s population shrank 36 percent to 2.8 million people. In the 1980s, an average 20,000 people left the country every year, departing for the U.S., the U.K. and Australia. Now, Ireland’s GDP per person is about a third above the average for countries in the Organization for Economic Cooperation and Development. Ireland’s economy grew by an annual average of 6.7 percent between 1997 and 2007, three times quicker than the euro region, according to the OECD. “Ireland is not the weak link of the euro area,” European Central Bank President Jean-Claude Trichet said on Feb. 20 in Paris. “There is no weak link of the euro area.” Moreover, many of the traditional destinations for the Irish -- including the U.S., Australia and the U.K. -- are struggling with rising unemployment. “The difficulty is that today, there’s nowhere to go,” said John Graby, director of the Royal Institute of Architects of Ireland. “Even Australia seems to be going downhill. I heard of an Irish architect who sent an e-mail home saying he got the last job in Brisbane.”

Weakest Pace

The global economy will expand by just 0.5 percent this year, which would be the weakest pace since World War II, the International Monetary Fund has forecast. The U.S. economy may shrink by 1.6 percent and the U.K. economy by 2.8 percent, the Washington-based fund said on Feb. 5. Undeterred, some are packing their bags. “Since last year, we’ve noticed quite a large increase in the volume of people looking for information,” said Edwina Shanahan, sales manager at Visa First in Dublin, which provides work visas for countries such as Australia, Canada and China. “A lot of these people have been made redundant or know they will be made redundant. It’s been a constant pull out there.”

The global economy will expand by just 0.5 percent this year, which would be the weakest pace since World War II, the International Monetary Fund has forecast. The U.S. economy may shrink by 1.6 percent and the U.K. economy by 2.8 percent, the Washington-based fund said on Feb. 5. Undeterred, some are packing their bags. “Since last year, we’ve noticed quite a large increase in the volume of people looking for information,” said Edwina Shanahan, sales manager at Visa First in Dublin, which provides work visas for countries such as Australia, Canada and China. “A lot of these people have been made redundant or know they will be made redundant. It’s been a constant pull out there.”